A journey through policy, progress, and being a patient by Kate Steadman

January 05, 2006

More on states

Speaking of state legislation, some interesting bills are coming down the pipe that would compel private companies to spend a certain percentage of their payroll (varying between 8-11%) on health insurance for employees. It's basically an indirect way of requiring employers to provide health care -- requiring only 8-11% is still requiring health spending.

The problem with states compelling coverage is that, while they have the muscle to do so, they don't necessarily have the resources to cope with the fallout. More than a few states are buckling under the weight of their Medicaid programs. It's tricky to demand coverage when the reasons many employers don't offer it (or employees don't buy in to it) is because it's just too expensive. Small businesses, in particular, have difficulty buying into the market.

But small businesses aren't the targets of this legislation. The bills are meant to crack down on large retailers who don't (and should) provide coverage. Wal-Mart relies on its large profit margins by playing monoply with its suppliers and paying low-as-dirt wages. Requiring it to spend 8-11% of payroll on health care, when it's often the largest private employer in the state, will get bloody. That, coupled with several states' efforts to raise the minimum wage, will send some shockwaves through Wal-Mart's business model.

It's not clear what these initiatives will do, but it's much easier to get major reform passed in the state versus the fed. We might see reform come through that avenue if enough states enact satisfactory changes.

But you can be sure this policy wonk is waiting behind her laptop with baited breath.

Both policy wonks and businessmen alike are holding their breath in anticipation of what will become of the behemoth in the face of such bills. Requiring it to spend 8-11% of payroll on health care, when it's often the largest private employer in the state, will get bloody.

I'm not exactly sure what you're trying to say here, but most businesses already cover their employees. In the case of my employer (under 50 employees) it amounts to about 12% of my base wages, and that's not even including the dental portion.

I don't believe it is as big a problem as the big losers (the ones complaining the loudest) would have you believe, especially if you look at the likes of Ford, GM, Boeing etc. They are finally starting to speak out now, which is the main reason so much attention is being paid to this issue.

In the cases of Ford, GM, Boeing, their costs would likely go down, making them more competitive in world markets, which ultimately will be a boon to the US economy.

Of course it will effect some small businesses, and the businesses who freeload off the system now, increasing their costs, but everyone in the US is entitled to medical care regardless of their ability to pay.

There is no free lunch, and someone ultimately has to pay for it, but placing the burden, of paying for the health care costs of the uninsured, solely on the backs of big business is unfair?

As far as our system is based on employer sponsored health insurance, I believe employers should pay for it. It's absolutely unacceptable that big businesses who can more than afford the risk pooling/fee negotiations choose not to provide insurance or have strict rules for attaining it.

I agree that everyone is entitled to care, so I'm not sure where you're getting that from. I'm also more than aware that most employers provide health insurance, although it's not as much as you think: SURVEY FINDS STEADY DECLINE IN BUSINESSES OFFERING HEALTH BENEFITS TO WORKERS SINCE 2000 http://www.kff.org/insurance/chcm091405nr.cfm

insurance only works, when risk is spread among everyone who needs coverage to compensate for some potential loss. Health care, unlike most other things we purchase insurance to cover, is something that we all need, or will need at some time.

So to let some opt out of the system, because they don’t need care, or can't afford it (which there are programs that address that problem) at any moment in time, defeats the purpose of insurance, and is why the system we have right now is so flawed.